The TV talent show panellist sued the media group after the Sun ran a false story that he sexually assaulted a man.

Leonard Watters was jailed for six months for wrongly accusing Mr Walsh of groping him in a Dublin club in 2011.

Mr Walsh took legal action against the publisher over the coverage of Irish police inquiries into the allegations.

He sued for damages, including for aggravated and exemplary damages, over an article published on 23 June 2011 with the headline Louis Probed Over 'Sex Attack' on Man in Loo.

The paper accepted the accusation was false but denied defamation, saying that it acted fairly.

The case had been listed for mention in the High Court in Dublin.

'Remained angry'

Mr Walsh said he felt vindicated by the settlement adding that the story had "started with the Irish Sun".

"I have the utmost respect and time for most journalists with whom I've always enjoyed a good relationship," he said.

He said, however, that he remained angry at the way he had been treated by the paper.

"I am therefore absolutely gutted and traumatised that these allegations against me should have been published, particularly as I had made it clear at the time there was not one iota of truth in them, that I was totally bewildered as to who would have made up this type of story," he said.

"Although the perpetrator has since been convicted as a result of concocting the allegations, this didn't stop the story being spread all around the world as a result of the Sun's headlines."

He said that while no amount of money would compensate him for what he had been through, he was glad to have achieved a decisive and categorical settlement.

Watters, a 25-year-old father-of-two, alleged he had been sexually assaulted by Mr Walsh in a toilet at the club. His first complaint was made to police outside the club within hours of the false attack.

He was later examined in a sexual assault unit which revealed bruising in his genital area.

When the official complaint was made, the Sun and the Irish Sun printed the story before Mr Walsh was questioned under caution. He vigorously denied the accusation.

Within days investigators showed Watters CCTV footage from the club that disputed his claims, and he admitted he had made up the allegation.

Watters, from Navan in County Meath, was arrested, charged and publicly apologised to Walsh for the unfounded claims. He was recently released from jail.

Paul Tweed,Mr Walsh's solicitor, said: "Although the person who fabricated the story has since been convicted in the criminal courts, this is a prime example of the serious damage that can be inflicted on an individual, whether they are well-known or not, by the publication of totally unfounded allegations which, in the age of the internet, can circumnavigate the globe in a matter of seconds.

"The serious consequences of worldwide dissemination online of a defamatory story is a fundamental problem which Lord Leveson's Report, to be published tomorrow in the UK, will hopefully address on the principle that prevention is always better than cure."